Performance Management & Appraisal – Oil & Gas Industry

By

Shakeel Ahmed (20131-16193)

Masroor Muneer (20141-17946)

Bilal Nasir (17801)

Institute of Business Management

Department of Management Sciences

Submitted to

Ms. Aleena Nathani

Karachi, Pakistan.

2019
 ACKNOWLEDGEMENT
In the present world of competition there is race of existence in which those are having will to

come forward to succeed. Project is like a bridge between theoretical and practical work.

First of all, we would like to the supreme power the Almighty ALLAH who is obviously the one

has always guided us to work on the right path of life, without his grace the project could not

become reality. Next to him Muhammad [PBUH] who guided the path of ALLAH, then our

parents whom we are greatly indebted for me brought up with love and encouragement to this

stage.

We are feeling oblige in taking the opportunity to sincerely thanks to Ms. Aleena Nathani for

their generous attitude and friendly behavior. We have valuable words to express my special

thanks, but, our heart is still full of favors received from every person.

We would also like to thank Ms. Waheed Murad (Total-Parco), Mr. Inamullah Shah (PSO) who

gives us time for their experience & information sharing regarding performance management &

appraisal in their organizations from their valuable time.

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SOURCES OF INFORMATION
Information in this report is gathered from different resources like; interviews conducted of
following personnel of Total-Parco Pakistan Limited and Pakistan State Oil.
1. Mr. Waheed Murad
Assistant Manager HR Support
Tel: +92 21 35681371 Ext: 245
Direct: +92 21 35684384
waheed.murad@totalparco.com.pk

2. Mr. Inamullah Shah

Sr. Officer Human Resource
+92 311 258 0703
inamullah.shah@psopk.com

Information about the company’s are collected from company website and Annual Reports.

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Table of Contents
A. COMPANY PROFILE’S ...................................................................................................................... 5
PAKISTAN STATE OIL COMPANY LIMITED ........................................................................................ 5
Marketing & Distribution ..................................................................................................................... 5
Acquisition of Products ......................................................................................................................... 5
Storage .................................................................................................................................................. 6
Product Movement ................................................................................................................................ 6
Vision .................................................................................................................................................... 7
Mission .................................................................................................................................................. 7
PSO Business Lines .................................................................................................................................. 8
TOTAL-PARCO PAKISTAN LIMITED .................................................................................................... 9
Promoting Safety Culture: .................................................................................................................. 11
A Brand of Choice: ............................................................................................................................. 11
Values ................................................................................................................................................. 11
B. PERFORMANCE MANAGEMENT ................................................................................................. 12
PAKISTAN STATE OIL COMPANY LIMITED ...................................................................................... 12
TOTAL-PARCO PAKISTAN LIMITED .................................................................................................. 12
C. PERFORMANCE MANAGEMENT TOOLS ................................................................................... 13
PAKISTAN STATE OIL COMPANY LIMITED ...................................................................................... 13
TOTAL-PARCO PAKISTAN LIMITED .................................................................................................. 13
D. APPRAISAL SYSTEM ...................................................................................................................... 14
PAKISTAN STATE OIL COMPANY LIMITED APPRAISAL PROCESS ............................................... 14
Performance Measurement Methods .................................................................................................. 15
TOTAL-PARCO PAKISTAN LIMITED APPRAISAL PROCESS ........................................................... 15
Performance Measurement Methods .................................................................................................. 16
CONCLUSION & RECOMMENDATION ............................................................................................... 16

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A. COMPANY PROFILE’S
PAKISTAN STATE OIL COMPANY LIMITED
Pakistan State Oil (PSO), is the nation’s largest energy company, and is currently

engaged in the marketing and distribution of various POL products including Motor Gasoline

(Mogas), High Speed Diesel (HSD), Furnace Oil (FO), Jet Fuel (JP-1), Kerosene, CNG, LPG,

Petrochemicals and Lubricants.

In addition to these products, we also import other products based on their demand patterns. A

brief overview of each of PSO’s business facets is presented below:

Marketing & Distribution

PSO possesses the largest distribution network in the country comprising of 3,754 outlets
out of which 3,565 outlets serve the Retail sector and 189 outlets serve our bulk customers. Out
of the total of 3,754 outlets, 1,786 Retail and 167 Consumer Business outlets have been upgraded
with the most up-to-date facilities as per the visualization of the New Vision Retail Programme.
PSO also operates 26 company-owned and company-operated (Co-Co) sites serving the retail

sector. Co-Co sites are flagship stations which combine high levels of supervision and top

quality products to maintain the highest level of efficiency, service and customer care. These

sites act as benchmark for all other retail outlets.

In addition to retail customers more than 2,000 industrial units, business houses, power plants

and airlines are being fueled by PSO.

Acquisition of Products
The automotive sector is the main consumer of Motor Gasoline (Mogas) and High Speed
Diesel (HSD) whereas Furnace Oil (FO) is marked for power plant usage.
To meet the supply deficit of the country, PSO imports Mogas, HSD, JP 1 and FO as and when

required. The total import of black and white oil in Pakistan last year was 12.4 million metric

tons and PSO had the lion’s share of this import with 11.2 million metric tons which came to

over 90% of the total fuel imports of the country. Other than product imports, PSO acquired 1.75

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million metric tons from various refineries based in Pakistan in order to cater to our market

needs.

Storage
PSO possesses the largest storage capacity in the country. The company’s infrastructure
stretches from Karachi to Gilgit. With 9 installations and 23 depots located across the country
PSO’s storage capacity of approximately a million metric tons represents 68% of the total
storage capacity owned by all the oil marketing companies.

Product Movement
PSO uses three mechanisms for the movement of POL products namely, tank lorries

(road), tank wagons (railways) and pipelines. We currently have a total fleet of 8,595 tank lorries

out of which 2202 tank lorries are New Vision tank lorries which are complying with the latest

ADR standards and are equipped with pilferage proof tracker systems. With the commencement

of operations of the White Oil Pipeline Project (WOPP) from Karachi to Mehmood Kot via

Shikarpur and the MFM (Mehmood Kot/Faisalabad/Machikey) pipeline, the supply pattern for

white oil from Karachi has switched from tank lorries to pipelines. PSO is present as a partner in

this project and holds a 12% equity share in this venture.

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Vision
To excel in delivering value to customers as an innovative and dynamic energy company
that gets to the future first.

Mission
We are committed to leadership in energy market through competitive advantage in
providing the highest quality petroleum products and services to our customers.
 Professionally trained, high quality, motivated workforce, working as a team in an
environment, which recognizes and rewards performance, innovation and creativity, and
provides for personal growth and development.
 Lowest cost operations and assured access to long-term and cost effective supply sources.
 Sustained growth in earnings in real terms.
 Highly ethical, safe environment friendly and socially responsible business practices

Values
 Excellence
We believe that excellence in our core activities emerges from a passion for satisfying our
customers' needs in terms of total quality management. Our foremost goal is to retain our
corporate leadership.
 Cohesiveness
We endeavor to achieve higher collective and individual goals through team. This is inculcated

in the organization through effective communication.

 Respect
We are an Equal Opportunity Employer attracting and recruiting the finest people from around

the country. We value contribution of individuals and teams. Individual contributions are

recognized through our reward and recognition program.

 Integrity
We uphold our values and Business Ethics principles in every action and decision. Professional

and personal honesty, dedication and commitment are the landmarks of our success. Open and

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transparent business practices are based on ethical values and respect for employees,

communities and the environment.

 Innovation
We are committed to continuous improvement, both in New Product and Processes as well as

those existing already. We encourage Creative Ideas from all stakeholders.

 Corporate Responsibility
We promote Health, Safety and Environment culture both internally and externally. We

emphasize on Community Development and aspire to make society a better place to live in.

PSO Business Lines

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TOTAL-PARCO PAKISTAN LIMITED
TOTAL-PARCO COMMITMENT TO A BETTER PAKISTAN

We, at TOTAL PARCO Pakistan Limited, are committed to providing affordable,

reliable and clean energy in accordance with the highest safety standards and environmental

concerns.

The fourth largest Oil and Gas Company in the world, TOTAL S.A. and the most modern

refinery in Pakistan with a cross-country pipeline network, Pak Arab Refinery Limited (PARCO)

together formed a joint venture company in 2001, known as TOTAL PARCO PAKISTAN

LIMITED (TPPL) and the organization has been on a upward trajectory ever since. Indeed, after

merging with Total Oil Pakistan Ltd. In 2015, TOTAL PARCO acquired the Chevron’s retail

network raising its network footprint to more than 800 stations and priming it to become the

second largest OMC operating within Pakistan.

Lubricants operations were launched in 1999 and TPPL has been successfully marketing a

complete range of Automotive and Industrial lubricants catering to the diversified needs of

consumers across various industries. Our automotive oils include the ‘QUARTZ’ Range for

gasoline engines and the ‘RUBIA’ range for diesel engines. In addition, ‘HI-PERF’ is amongst

the leading brands in the motorcycle oil category.

Transforming Our Relationship with Customers:

Being a customer-centric organization, TOTAL PARCO Pakistan continually revitalizes

its relationship with its customers by developing innovative solutions and delivering high quality

products and services. Since its inception, TOTAL PARCO has pioneered several innovative

concepts such as:

 Becoming the first Oil Marketing Company to launch higher quality unleaded gasoline

marketed under the brand name “Hi-Super”.

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 TPPL introduced the Country’s first chip based fuel card, the “TOTAL Club Card”,

which provides a unique combination of Convenience, Security, Control and Reliability.

 In 2018, TOTAL PARCO launched “TOTAL EXCELLIUM HOBC”- the premium

fuel which is made with breakthrough technology that prevents upto 93% of deposit buildup and

keeps all kinds of gasoline engines clean kilometer after kilometer.

 To facilitate customers, TOTAL PARCO launched its TOTAL Services App with the

slogan “The Shortest Path Between You And Us”; that connects the customers to our nation-wide

retail network.

 TPPL service stations are designed as one-stop retail solution, providing convenience

beyond just fuels to millions of customers every day.

 Our Lubricants division launched an innovative service in Karachi and Lahore called

“Insta Lube”, which provides oil change facility at the consumer’s doorstep and offers the

quickest and most comfortable way to change your vehicle’s engine oil whenever and wherever

required.

 “TOTAL QUARTZ Auto Care” and “TOTAL RUBIA Truck Centre” are the modern

oil change facility concepts which go beyond than just an oil change & promise a unique

customer experience complemented by our high quality lubricants & services.

 With an extensive retail network of more than 800 outlets nationwide, TOTAL PARCO

has recently achieved the major milestone of inaugurating its “650th New Image Retail

Station” as part of its aggressive push for network modernization which has also made it the

second largest “New Image” Total network in the world after France itself.

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Promoting Safety Culture:

Safety, being our first priority, is an integral part of TOTAL PARCO’s corporate culture

and a philosophy we wish to propagate. Being a Socially Responsible Organization, we actively

sponsor in public welfare projects - such as: Road Safety Champions, Safety Leader Programs,

Community Uplift and Natural Disaster Relief etc.

A Brand of Choice:

TOTAL PARCO has been the recipient of the Brands of the Year Awards & Emerging

Brand of the Year Awards in 2006, 2009, 2011, 2014-15 and again in 2015-16 thus setting the

very highest of standards and demonstrating the entire company’s commitment towards

maintaining our winning streak.

Today, thanks to our valued customers, we are proud to be a brand of choice in

Pakistan!

Values
 Safety
 Respect for Each Other
 Pioneering Spirit
 Standing Together
 Being Performance Minded

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B. PERFORMANCE MANAGEMENT
PAKISTAN STATE OIL COMPANY LIMITED
Oil marketing industry is one of the most competitive industry in Pakistan so this is the

reason that PSO always looks for measuring and developing the performance of team and

individual and aligning them with business objectives. The purpose of performance management

in PSO are increased profitability through Ethical & legal practices, create an environment for

their human capital to increase their efficiency/productivity and improve their living standards

and provide meaningfully contribution to Society. PSO managers uses performance management

in their daily routine working which is inherited from PSO HR Core values.

PSO effectively manage performance by clarifying job responsibilities and expectations

from individual employee by setting their objectives at the start of year in alignment with

objective of the company, enhancing individual and group productivity by providing individual

need training and group activities respectively, developing employee capabilities to their fullest

extent through effective feedback and coaching through their managers on individual & team

work , group discussion at department level, individual meetings with supervisors/DGM/HOD,

and by Improving communication between employees and managers specially it comes from

MD/CEO of the company when interact with employees through MD Communication meeting in

Auditorium and “In-Person with MD” meeting with MD/CEO where specific department all

employee meet him and address their concerned.

TOTAL-PARCO PAKISTAN LIMITED

Total-Parco provides an environment & authority to their managers to implement

performance management during their working relationship with sub-ordinates and peers. The

primary purpose of performance management in Total-Parco are Growth of Company with

growth of employee keeping in minds the formula “respects all human beings” and s and

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considers employees as its greatest asset, striving to support employees, their families, nearby

communities and other stakeholders in accordance with Human Rights.

In Total-Parco PMS allows employees to constantly monitor their performance, and

managers to run the system continuously and not periodically, like a fitness-tracker for work,

where employees considered their performance management process as fair and objective, where

employees are connected to each other, provide in itself recognition, and allows employees to

develop and learn.

C. PERFORMANCE MANAGEMENT TOOLS

PAKISTAN STATE OIL COMPANY LIMITED
Balance Scorecard is used as business performance management tool in Pakistan State

Oil. The Balanced Scorecard, referred to as the BSC, is a framework to implement and manage

strategy. It links a vision to strategic objectives, measures, targets, and initiatives. It balances

financial measures with performance measures and objectives related to all other parts of the

organization.

In PSO, Balance Scorecard includes Financial, Customer Satisfaction, Process improvement,

HSE, Digital transformation, Organizational Capacity, Infrastructure Enhancement and these

objectives are transferred to individual department level (HOD) and a second level Scorecard is

then created in alignment with company’s scorecard which is then transferred to individual

objectives.

TOTAL-PARCO PAKISTAN LIMITED

TOTAL is a France based company & is working as a joint venture with PAK-ARAB

Refinery Limited (PARCO) in PAKISTAN as TOTAL-PARCO PAKISTAN Limited, therefore

objectives of TOTAL-PARCO are derived from both parent company’s. Objectives of TOTAL-

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PARCO are set by Region head of TOTAL with consultation of MD/CEO of PARCO and then

these are assigned MD/CEO of TOTAL-PARCO PAKISTAN Ltd. There is a committee called

Ex-COM which includes all HOD’s, objectives of MD/CEO are then assigned to HOD’s and

then to individual employee.

D. APPRAISAL SYSTEM
PAKISTAN STATE OIL COMPANY LIMITED APPRAISAL PROCESS
The appraisal process starts with initiation of appraisal form (EPA1) by the individual

employee after completion of fiscal year. The whole process is run through Software application

i.e., IBM Lotus Notes. When employee initiate process of submission of Objective achieved, the

application itself load the objectives set for current year which was set at the start of year with

the consent and mutual agreement with supervisor.

Employee then write response to every objective, what he or she have achieved against the set

target and perform self-assessment against the competences set in the form, and then submit to

immediate supervisor. Immediate supervisor then set the meeting time to discuss the

performance of individual. After the meeting supervisor rate the performance against the

objectives as well as against competences and mentioned in remarks and also performed training

needs and forward the form to Deputy General Manager (DGM). DGM analyze the performance

and rating of individual, if there is some changes required against the rating of supervisor, DGM

send it back to supervisor to review the performance else send it employee to agree or disagree

with rating. After agreement or disagreement the form is send to HOD for final comment (if the

individual disagree then a separate process is initiated at later stage), HOD add final remarks on

the performance of the employee and send it HR department.

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Another meeting is set with supervisor to discuss the future path and set the objective for next

year which is then documented again on the same application, which also reviewed & approved

by Supervisor & HOD respectively and then send it to HR.

When there is employee who has been transferred from one department to another during the

year then his/her appraisal will be done by both department however where he/she server more

than six months that department head rating will have bigger share in their ratings.

Performance Measurement Methods

A combination of four performance measurement methods are used in PSO.
1. Management by Objective (MBO)
2. Rating
3. Ranking
4. Force Distribution Method (Bell Curve)

MBO is used for setting of objective for every employee at the start of the year with KPI’s and

then it is reviewed and evaluated at the end of the year, it is one of the method used for

performance measurement. Rating method is used to evaluate the set objectives as well as

competencies of every employee. HOD’s rank their employees as per their ratings and HR apply

force distribution method in five categories that are; Excellent, Very Good, Good, Fair and

Inadequate.

TOTAL-PARCO PAKISTAN LIMITED APPRAISAL PROCESS

Every year supervisor discuss and sets the objectives for the next year in align with

company objectives and send it HR department after approval by line manager and HOD. HR

department evaluate the KPI’s of every individual so that to avoid any biasness made by Line

manager/HOD. The appraisal process starts with self-assessments of individual employees

against the target sets for each individual with the agreement of employee and their supervisor.

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Employee submit Objective achieved against set KPI’s and self-assessment, then submit to line

manager, line manager evaluate the performance of employee and then submit to HOD and after

approval HOD sent it to HR department. If any complain is received by any employee of

biasness or injustice regarding performance evaluation, HR department first evaluate all

perspective like setting of KPI’s and target achieved then initiate grievances process.

Performance Measurement Methods

A combination of three performance measurement methods are used in PSO.
1. Management by Objective (MBO)
2. Rating
3. Force Distribution Method (Bell Curve)

MBO is used for setting of objective for every employee at the start of the year with KPI’s and

then it is reviewed and evaluated at the end of the year, it is one of the method used for

performance measurement. HOD’s rank their employees as per their ratings and apply force

distribution method in five categories that are; Excellent, Very Good, Good, Average and Need

Improvement.

CONCLUSION & RECOMMENDATION

In this project, we relate the Performance Management theories to practicality, what we

learned in this course and how it works in any organization and we choose Pakistan State Oil

and TOTAL-PARCO Pakistan as organizations from Oil & Gas Industry for this Project.

Overall PSO& Total Parco performance management, compensation & benefits are very

good as compared to other Industries in Pakistan, however, we would recommend some

improvements which can increase profitability using efficient Performance Management;

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1. Oust Ineffective, Traditional Performance Reviews

Companies should avoid using Force distribution method of performance measurement

instead it should be done on actual performance of employees, and appraisal process should

be done twice a year instead of only once a year.

2. Identify and Praise A-Players

As indicated above, appraising performance against the Bell Curve is problematic. But when

it comes to identifying star performers, the Bell Curve can be helpful. In most cases, 10% of

employees make up the lowest rankings, and 10% make up the highest.

Once you’ve identified them, you must do all that you can to retain these devoted high

performers, because as Mark Zuckerberg says, “Someone who is exceptional in their role is

not just a little better than someone who is pretty good. They are 100 times better”.

3. Use an Automated System to Develop a Continuous Feedback Loop

To exchange feedback on performance regularly, you must be communicating with your

people on a weekly basis. Part of this exchange can be a weekly one-on-one meeting, but

automated weekly employee progress reports are also a great way to keep the lines of

communication open.

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